Reverse charge procedure

 

The current version of the sales tax law states that the business providing the service must collect the sales tax from its customers and pay it to the tax office. However, there are special regulations for deliveries within Germany or for cross-border deliveries and certain other services within the EU. This special regulation is known as the reverse charge procedure.

 

 

The reverse charge procedure means the reversal of the tax liability. Another term in tax law for this procedure is deduction procedure. In this case, the customer or recipient of the service must pay the sales tax. Consequently, the supplying entrepreneur may only issue a net invoice to his customer. The tax liability of the service recipient must also be indicated on this net invoice.

 

Thus, the recipient of the service has a sales tax liability to the tax office. However, the recipient of the service has the option of claiming the VAT amount as input tax, insofar as he is entitled to input tax deduction. However, there is one requirement for this approach:

 

The recipient of the service must be an entrepreneur or a legal entity under public law and, in cross-border cases, must have a sales tax identification number.

 

All business transactions within the EU must be reported by the service provider in a summary report to the Federal Central Tax Office by data transmission.

 

 

 

Ireland: 

 

UK:

"As of 31 January 2021, the United Kingdom became a third country for VAT purposes, and the EU reverse charge rules for the supply of goods sent to/from the UK no longer applies"